EUR/USD: Technical outlook and review...

The EUR currency declined in value for a second consecutive day yesterday, losing a little over 200 pips going into yesterday’s close 1.1310. This move saw several 4hr technical levels wiped out during its onslaught, ending with price spiking through 1.1300 and missing the 4hr demand area below it at 1.1239-1.1286 by a cat’s whisker. Although price is currently trading at a potential buy zone, the field of vision from here looks rather cramped…

To start with, there is immediate 4hr supply lurking just above current price at 1.1346-1.1319. Furthermore, both the weekly and daily timeframes show there is room to continue diving south. The nearest support, as far as we can see, comes in from the daily scale at an ignored daily Quasimodo level at1.1233 (positioned just below the aforementioned 4hr demand area). This, in itself, could very well tempt well-funded traders to fake below the current 4hr demand zone and take out stops!

Therefore, given the points made above, we shall not be looking to buy this market today unless price fakes below and closes back within the current 4hr demand. Lower timeframe confirmation will still be needed following a fakeout here, however, simply because, as we mentioned above, the path south on the weekly timeframe looks clean down to weekly demand at 1.0519-1.0798. Should this long trade come to fruition, partial profits will be quickly taken at 1.1300. It would only be once/if price closes above and retests this number as support, would we then feel safe to move our stop to breakeven. It will be interesting to see what the day brings!